Farm Progress

Are We Out of the Economic Woods Yet?

David Kohl, Contributing Writer, Corn+Soybean Digest

May 4, 2010

1 Min Read

A summary of the U.S economy would be that we are not out of the woods yet. Yes, there are very positive signs that the economy is growing in North America and particularly in the emerging economies, i.e. the BRIC nations of Brazil, Russia, India and, of course, China.

An examination of a few of the economic factors I follow finds that the U.S. Leading Economic Index (LEI) has risen steadily for the past year. This index includes 10 components, and eight of the 10 are now in a positive mode. The current level is the highest the U.S. LEI has ever been.

Second, the Purchasing Manager Index (PMI) is in a growth mode for the economy with a reading above 50 since last August. Latest figures find this component in the high 50s, which is indicative of a strong economy.

Core inflation is below the benchmark established by the Federal Reserve of 2%, with high unemployment. The Federal Reserve will be very careful about raising interest rates until changes occur in these indicators.

In the next column we will discuss other closely watched economic indicators that will tell us Paul Harvey’s “rest of the story.”

P.S. My overland trucker friends and train personnel are telling me that they are “out straight.” These are the front line troops that often provide us economic insight before the numbers.

Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at [email protected].

About the Author(s)

David Kohl

Contributing Writer, Corn+Soybean Digest

Dr. Dave Kohl is an academic Hall of Famer in the College of Agriculture at Virginia Tech, Blacksburg, Va. Dr. Kohl has keen insight into the agriculture industry gained through extensive travel, research, and involvement in ag businesses. He has traveled over 10 million miles; conducted more than 7,000 presentations; and published more than 2,500 articles in his career. Dr. Kohl’s wisdom and engagement with all levels of the industry provide a unique perspective into future trends.

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